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No clear benefit from growing US presence


Why Babtie chief executive Bill Mitchell has turned his back on his ambitious growth plan within four months of announcing it has remained a mystery since the buy-out was announced last month.

Babtie has a long standing tradition of independence and did not appear to need outside help to strengthen its position in the market.

It was planning to expand on its own, using its reserves and bank borrowings to fund a doubling in size over five years.

The consultant's finances look strong and the firm has consistently ranked among the top 10 in the UK. It is currently ranked eighth in the NCE Consultants File.

These factors would appear to prevail against selling up to an outside buyer.

Some of the firm's competitors believe Jacobs must have come up with an offer that Babtie's directors felt they and the firm's 200 employee shareholders could not reject.

Other observers believe the move could aid the company's plan to double turnover over five years. They argue that Babtie could tap into Jacob's balance sheet strength and New York Stock Exchange listing to raise the cash needed for growth.

Whichever viewpoint is right, Jacobs' takeover of Babtie will mark a further step in the Americanisation of consultancy in the UK.

Jacobs already owns Gibb, having taken it over from its US competitor Law in 2002.

Other US firms to have bought into UK consulting include Aecom, Kellogg, Harza, Parsons Brinckerhoff and URS.

The value of US firms buying into British consultants is debatable. Few have really imposed themselves on the UK market by expanding the businesses they have bought.

There is a strong view that the Gibb business lost its way under US ownership, especially under Law.

One top 10 consultant said the firm was, if anything, a less significant competitor today.

'I don't find the track record of the Americans coming into the UK has shown them to be a large threat, ' he said.

The same goes for Harza, which bought water and waste management consultant Montgomery Watson in the 1990s, and which has stuck to these sectors ever since.

Other firms have got their fingers burned, notably KBR, which was replaced, albeit by another American firm, as programme manager on the West Coast Main Line upgrade.

British consultants will take heart from these factors as they digest the Jacobs/Babtie deal.

Some pointed out this week that the takeover will mean less competition as the two have been known to compete for the same type of work.

But others will point to the fact that fewer consultants than ever remain truly independent. Of the top 10 firms, only Mott MacDonald, Arup, Halcrow and Scott Wilson are still independently owned.

The rest are either stock market listed like Atkins, WSP, Mouchel Parkman and Capita Symonds, or American owned like Jacobs and KBR.

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